Metallus Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $799.14m | Revenue (TTM) = $1.22b
Market Cap = $799.14m | Estimated Revenue = $1.33b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $693.14m | Revenue (TTM) = $1.22b
Enterprise Value = $693.14m | Forward Revenue = $1.33b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Metallus Stock Analysis
Analyst Opinions
8 Analysts have issued a Metallus forecast:
Analyst Opinions
8 Analysts have issued a Metallus forecast:
Metallus Events
Past Events
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AUG
4
Q2 2026 Earnings Call
about one month ago
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MAY
5
Q1 2026 Earnings Call
5 months ago
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FEB
20
Q4 2025 Earnings Call
7 months ago
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NOV
7
Q3 2025 Earnings Call
10 months ago
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StocksGuide Free
Metallus — Q2 2026 Earnings Call
1. Management Discussion
Hello, everyone. Thank you for joining us, and welcome to the 2Q 2026 Metallus Inc. Earnings Call. [Operator Instructions]
I will now hand the conference over to Jenna Johnson. Please go ahead.
Good morning, and welcome to Metallus' Second Quarter 2026 Conference Call. I'm Jenna Johnson, Senior Manager, Finance and Investor Relations for Metallus. Joining me today are Mike Williams, Chief Executive Officer; Kris Westbrooks, President and Chief Operating Officer; and John Zaranec, Executive Vice President and Chief Financial Officer. You should have received a copy of our press release, which was issued last night.
During today's conference call, we may make forward-looking statements as defined by the SEC. Actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in yesterday's release. Please refer to our SEC filings, including our most recent Form 10-Q, which will be filed later today as well as the risk factors included in our earnings release, all of which are available on the Metallus website.
Where non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are included in the earnings release and earnings presentation available on the Investor page at metallus.com.
Now I'll turn the call over to Mike Williams for his remarks.
Thank you, Jenna, and thank you all for joining us today. In the second quarter, we generated adjusted EBITDA of $29 million, improving profitability, both sequentially and year-over-year. This is consistent with the expectations we outlined earlier this year. Increased shipments, higher melt utilization, improved pricing and product mix and solid operating performance drove the improvement. We also continue to benefit from healthy demand across our end markets with the order book up over 50% year-over-year, providing strong visibility heading into the second half of the year.
Our second quarter results reflect the progress we continue to make against our strategic priorities and underscore the strength of our existing and diversifying end markets and customer relationships. As we enter 2026, our focus was simple: improve profitability versus the prior year through consistent execution, commercial excellence and operational improvement. Our first half performance demonstrates the progress we are making towards that objective with safety remaining our top priority. At Metallus, we continue strengthen our safety culture across our facilities through targeted training, enhanced tools and increased accountability. We also continue to make significant progress with our strategic capital investments with early indicators suggesting these initiatives are positioned to deliver meaningful commercial and operational benefits over time.
The bloom reheat furnace was fully commissioned in early July and is improving process consistency, enhancing downstream product flow and increasing reliability across the facilities. These improvements are supporting stronger operational execution and position us for greater throughput and productivity gains. At the same time, commissioning of the roller furnace remains on track and is progressing as planned. These investments, which were supported in part by U.S. government funding, are expected to improve throughput, quality, efficiency and service levels for our customers once fully operational. Together, they represent an important step forward in strengthening Metallus' manufacturing capabilities, enhancing our ability to serve critical aerospace and defense programs and strengthening our ability to meet increasing customer demand across industrial, automotive and energy markets.
In the third quarter, we look forward to celebrating these investments at our ribbon-cutting ceremony and hosting representatives from the U.S. government, key defense customers and industry partners as we mark this important milestone for the company. The event will highlight the successful partnership between Metallus and the U.S. government in supporting the defense industrial base. Strong customer demand and a continued growing backlog provide confidence as we begin the second half of the year. Lead times for both our engineered SBQ bar and seamless mechanical tubing products have extended into late fourth quarter 2026, reflecting healthy demand across all markets and ongoing inventory replenishment activity.
Turning to the end markets. Our diversified end market portfolio continues to provide balance across market cycles, while creating opportunities for profitable growth and increasing participation in attractive growing markets.
Automotive remains a core market for Metallus and an important contributor to our long-term growth strategy. Auto shipments during the second quarter grew 12% sequentially and 8% year-over-year. Demand across targeted light truck and SUV applications have remained steady, reflecting the value our long-standing customers place on our quality, technical expertise and reliability. We are also pleased to announce that we secured a new multi-year award for ring gears on a leading automakers hybrid transmission platform. Production is expected to begin in 2028. This award further demonstrates our ability to win strategic business on key vehicle platforms while positioning Metallus to benefit from continued hybrid vehicle adoption.
While industrial shipments in the quarter were down slightly sequentially and year-over-year due to balancing customer requirements with order and shipment timing. Industrial markets remain strong and represent one of the largest portions of our order book growth.
Our industrial backlog has nearly doubled compared with the prior year, providing strong visibility into future demand. We look forward to delivering for our customers to meet the growing industrial demand in the second half of 2026 as we advance our operational improvements and assets throughput initiatives.
In Energy, demand remained stable despite a cautious capital spending environment, while geopolitical and commodity price uncertainty has moderated activity levels, reduced import competition and improving domestic production are supporting demand for our seamless tubing products. These market conditions are helping improve utilization of our seamless tube assets and create additional opportunities moving forward.
Aerospace and defense remains one of our most attractive growth opportunities, and that momentum was evident in the second quarter when we delivered record shipment tons and sales for these products. Demand continues to be supported by new defense initiatives and existing program replenishment efforts, driving backlog growth. This momentum supports our confidence in achieving our targeted $250 million revenue run rate and highlights the increasingly important role Metallus plays in serving critical defense markets. We were also pleased to achieve AS9100D certification during the quarter, an important and widely recognized quality standard in the aerospace and defense industries. This certification gives customers added confidence in our ability to deliver the quality, reliability and consistency required for mission-critical applications. It also strengthens our competitive position, supporting our VAR growth strategy and expanding opportunities in high-value markets. I'd like to congratulate our team on this achievement. Earning the AS9100D certification was a significant cross-functional effort that required dedication, collaboration and discipline across the organization. Most importantly, it reflects the culture of continuous improvement and operational excellence that is embedded throughout Metallus.
In closing, Metallus is a stronger and more resilient company today than it was just a few years ago. We are continuing to maintain a strong balance sheet, improve our operating performance, invest in key manufacturing capabilities, enhance partnerships with existing customers while broadening our customer portfolio and sharpen our focus on the most attractive opportunities within the specialty metals market. Our priorities remain clear: operate safely; serve our customers reliably; execute our strategic initiatives; and deliver sustainable value to our shareholders. I am proud of what our team accomplished during the second quarter, and I am encouraged by the opportunities ahead.
With that, I'll turn the call over to John to review our second quarter financial results in more detail.
Thanks, Mike. Good morning, and thank you for joining our second quarter 2026 earnings call. During the quarter, our team delivered improvements in shipments, net sales and profitability on both a sequential and year-over-year basis, consistent with our expectations. As Mike noted, we also safely advanced operational and strategic investments to support near- and long-term business growth while maintaining a strong balance sheet.
From a top line revenue perspective, second quarter net sales totaled $341 million, a year-over-year increase of $36.4 million or 12%, primarily driven by higher shipments in aerospace and defense and automotive.
Net income was $8.9 million in the second quarter or $0.21 per diluted share. On an adjusted basis, net income was $11.1 million or $0.26 per diluted share.
Adjusted EBITDA was $29 million in the second quarter, a year-over-year increase of $2.5 million or 9%. The increased profitability was primarily driven by improved prices, improved mix and higher shipments, partially offset by manufacturing performance. As melt utilization improved, but fell short of plan to fully offset the known increases in energy costs and the first full quarter of labor related to the newly ratified union contract.
In the second quarter, operating cash flow totaled $12.8 million, driven by profitability and lower inventory, partially offset by higher accounts receivable at the end of the quarter from increased sales and lower accounts payable due to the timing of raw material purchases.
In the second quarter, capital expenditures totaled $15.2 million, including approximately $9.5 million related to the projects primarily funded by the U.S. government. Consistent with our previous communications, planned capital expenditures for the full year 2026 are expected to be approximately $70 million, inclusive of approximately $35 million of capital expenditures primarily funded by the U.S. government.
At the end of the second quarter, the company's cash and cash equivalents balance was $108.6 million. As it relates to government funding, during the second quarter, the company received the final $11.3 million of cash funding from the U.S. Army. As a reminder, these funds are part of the previously announced nearly $100 million funding agreement in support of the U.S. Army's mission of increasing munitions production. This funding substantially paid for both the new bloom reheat furnace at the company's Faircrest facility as well as the new roller furnace at the Gambrinus facility.
Now switching to pensions. In the second quarter, the company made $5.4 million of required pension contributions related to the U.S. bargaining plan. Based on our updated actuarial analysis, no additional pension contributions are expected for the remainder of 2026. As a reminder, our 2026 pension contributions represent a reduction of over 60% when compared to 2025. In terms of shareholder return activities, in the second quarter, the company repurchased approximately 190,000 shares of common stock at a cost of $3.6 million. At the end of June, a balance of $81.8 million remained under our existing share repurchase program. Since the inception of common share repurchases in early 2022, combined with the convertible note repurchase activities, we've reduced diluted shares outstanding by a significant 26% or 14 million shares. These actions reflect the strength of the company's balance sheet and confidence in through-cycle cash flow generation. As it relates to liquidity, on June 30, 2026, the company refinanced its asset-based revolving credit facility and extended the maturity date to June 2031. After the amendment, the credit facility committed capacity is now $300 million. The new agreement includes an increase in the optional credit facility expansion feature to $200 million and also includes a variety of improvements in other financial terms and covenants, including reduced annual fees. The refinance agreement provides us with the flexibility to pursue our strategic initiatives as total liquidity remains strong at $395 million as of June 30, 2026. At the end of the second quarter, the company had no outstanding borrowings.
Turning to the near-term business outlook. Commercially, third quarter shipments are expected to be similar to the second quarter based on customer mix and lead time expectations. Lead times for bar and tube products currently extend into late fourth quarter. Based on lead times and product mix, third quarter price and mix are expected to be slightly better than in the second quarter. The company recently announced price increases effective early August for customers not covered by annual pricing agreements of $60 per ton on bar, $100 per ton on carbon seamless mechanical tubing and $160 per ton on alloy seamless mechanical tubing products. Based on lead times, the company expects to realize the full run rate benefit of these price increases beginning in 2027.
From an operational perspective, the company anticipates a slight sequential increase in its third quarter average melt utilization rate, supported by a strong order book. Manufacturing costs are expected to be relatively flat in the third quarter as a result of slightly higher melt utilization, offset by increased planned maintenance outages.
Finally, an adjusted effective income tax rate of between 27% and 30% is expected for the full year 2026. Given these elements, the company expects third quarter 2026 adjusted EBITDA to be slightly higher sequentially and year-over-year, consistent with our message throughout the year of increased profitability each quarter.
To wrap up, thank you to all of our employees, customers and suppliers for their support. The progress we have made in the first half of 2026 demonstrates our position as a high-quality U.S.-based specialty metals producer, supporting critical markets. As we continue to move forward in 2026, our focus is on safe execution to meet continued rising customer demand. We remain committed to delivering shareholder value through disciplined capital allocation and sustained profitable growth. As always, thank you for your interest in Metelus.
We would now like to open the call for questions.
[Operator Instructions] Our first question comes from the line of Dave Storms with Stonegate.
2. Question Answer
Maybe I wanted to start with one -- I wanted to start with a clarification on the pricing increases. It sounded like you'll see full run rate in 2027. Just want to confirm, that's on the 30% of your order book that is not contracted, correct? That's the spot price portion of your order book?
That is correct.
Okay. Perfect. So then we should expect maybe '27, '28 of those increases on the contracted portion of your order book, if that sounds fair.
And then I guess maybe just the general question here is, how are those conversations going? Are customers being pretty receptive and understanding of the economic environment that we're in? Or any nuance there that we should be aware of?
Well, I mean, look, I mean, all the negotiations with our customers are held in high confidence. So we really don't discuss publicly how those are going. To be honest with you, they haven't really started yet. There's some preliminary discussions. And -- but I also want to qualify something. I don't -- I'm not sure we could predict what 2028 pricing is going to look like. But I will comment about 2027 as -- this has been a year where demand has improved, which naturally drives utilization rates and naturally drives potentially higher pricing acceptance in the market, and that's what we've seen so far this year. It does establish a starting point or a base of price negotiations for 2027, which tends to be positive in that nature. So 2027 is far from yet to be determined. But as that gets more clarified, we probably can talk a little bit more about that around the early first quarter when we review the fourth quarter results.
Your next question from the line of Samuel McKinney with KeyBanc Capital Markets.
You had a nice step-up in A&D sales in the second quarter, and it represents an annualized revenue of around $240 million, pretty close to the previously communicated target. So a 2-part question. Can you provide some more details around the biggest drivers behind the sequential revenue increase? And second, should we expect you to hit that $250 million annualized run rate in the third quarter?
Yes. I mean I would say that it's a combination of the step-up in sales. It's continued to increase in demand on the 155-millimeter munitions and also other munitions and then you combine that with the new programs that we've been awarded and are starting to see that demand materialize, that's what really drove the step-up in Q2. We do expect that to continue to improve over the next year as more and more of these new programs ramp up their manufacturing capacity, and we're there to supply them. So we're pretty excited about that. And we continue to work on new programs that will potentially have opportunities to ramp up in 2027, 2028.
Okay. And then the second quarter melt you...
[indiscernible] Before you asked that question. I just wanted to confirm your last part of your question. Yes, we -- our expectation is that we'll achieve that $250 million, at least that $250 million run rate by the end of this year.
Okay. So by the end of the year?
Yes.
Okay. And then second quarter melt utilization, 74%, up a little bit versus the first quarter, but it seems like you guys were looking to do a little bit better than 74%. So if you could just provide us all with a little more detail on why melt utilization improved less than you expected during the quarter?
Yes. Some of it's tied to power interruptions on our interruptible supply agreement. But more so is it really comes down to our shop floor execution and our maintenance reliability. We had expected better progress in that area in Q2. We did see positive progress, but not as much as we were planning for. And that's kind of how we guided what we felt the manufacturing costs were going to be. That's probably the biggest single opportunity we have to drive further cost improvement. And these new strategic investments in these assets are going to help us do that as well. So I think we're on the right path. We're on the right trend. I think we guided to that we do expect utilization to improve in Q3. And then just to qualify the fact that Q4 is when we have our very large maintenance outage. So everything that we do that we're focused on the shop floor execution, our strategic and our tactical investments are centered around reliability and improving our execution on the shop floor.
[Operator Instructions] Our next question comes from the line of Aaron Reed with Northcoast Research.
Yes, I just want to briefly touch on the backlog in the industrial doubling. Can you provide any more insights into maybe what subcategories or what industries are really driving that demand right now?
Well, I'd say, the #1 is really the industrial base that serves the yellow goods market. So it's really being driven by construction and mining equipment. And then you combine that with some other areas of improvement, a little bit of ag, a little bit of rail. That's predominantly it, but really, the majority of it is coming from the yellow goods sector.
Okay. That makes sense. That's helpful. And then the follow-up question is, I was wondering if you had any more insights as we get closer to '27 in terms of the cadence for revenue generation from the A&D sector. I know that can kind of be a little bit choppy. I wasn't sure if that became a little less opaque as we get further along in the year.
Well, there's a lot of things downstream from us being a primary material supplier to those specialty metal applications that we don't have control of. So what we are seeing is higher utilization in the munition sector ramping up existing capacity, and we see new entrants coming in to those sector as well. And that's where we're seeing increased demand. We're going to have a much better picture of it probably early next year as we go through our annual contract discussions. Very few of these people are on spot arrangements. And it's also going to be enhanced by a number of program awards that we're working on right now to secure for 2027 and beyond. So it's a little gray right now, but we do expect munitions to continue to increase in demand through next year because that's what they're forecasting. And then really, it comes down to all these new award -- programs that we're trying that win awards of -- for 2027.
Your next question from the line of John Franzreb with Sidoti & Company.
I'd just like to revisit the maintenance downtime that you expect in the third quarter. Can you talk to us a little bit about what you're doing and the potential impact on results in the 3Q?
Yes. So typically, we tend to do -- our non-bottleneck downstream asset maintenance tends to be a couple of million bucks in the quarter. It's all planned maintenance and unplanned maintenance. So we're very aware of what those planned costs are going to be, and that's why we guided to that effect in Q3.
Yes, John, we're doing that every quarter. It's just there's a little bit more in Q3 than Q2.
Got it. Was that the result of -- it sounds like maybe you didn't hit your maintenance targets in 2Q and you're playing that out in 3Q. Am I reading that properly or no?
No. I mean we did have -- we did have some of our -- we had our normal maintenance spend in Q2. However, it wasn't our normal planned spend. And -- but we expected a higher amount of utilization to offset that, and that didn't totally occur.
John, this is Kris. [indiscernible] that we're doing in Q3, it's -- the work in Q3 is well planned a year ago. We've been working on these plans for the tube mills and thermal treat assets, and that will be our focus in Q3 to complete that over a week and get it back and running.
Got it. And then just on 2 of the end markets, are there any changes in your thoughts about what's in the second half versus the first half in the automotive business? And similarly, I'm curious what your thoughts are on the Energy side. I guess with all the pricing and opportunity out there, I would just think that might be a little bit stronger doesn't seem to be the case for you.
Yes. In regards to automotive, you have to look at the platforms that we're on. So we're on the SUVs and the trucks. So we can -- expect that -- it's been healthy for us. I think the overall increase in shipments in Q2 versus Q1 was really timing. And then we expect basically flat demand for those platforms that we're on. That's what's being forecasted, and that's what we have built in. So those platforms have been healthy compared to the passenger car platforms. And so that's what we expect. If you look at the build rates that they're forecasting for the year, they're up slightly year-over-year, but pretty much in line with what they were forecasting for this year. So we don't really see any significant increase, but we'll see as we go. If they demand it, we'll figure out how to supply it. What was the second part of your question, John? Energy, oh...
[ Some of the ] thoughts on energy.
Yes. Energy is kind of -- it's fairly volatile, but I would say that, yes, we are seeing improvement in demand and opportunities in Energy. That's heavily being influenced by a slight increase in the number of drilling activity in the United States and also the trade tariff environment helps us in that regard. We see these domestic global energy companies trying to secure more domestic supply than relying on a global supply chain for their needs. So that's what we're seeing.
[Operator Instructions] Our next question from the line of Dave Storms with Stonegate.
Just wanted to ask a quick follow-up on aerospace and defense. You mentioned a couple of times that you've had some new program awards there. Just curious, with this new AS9100D certification, is that going to or already driving new awards? Is that more just table stakes? Maybe any more color there would be helpful.
Well, what the certification does is it verifies and validates our -- the discipline of our quality management system and our execution on the shop floor to comply with those very high restrictive quality requirements, what it does for us from a customer standpoint. We just were recently awarded that and recently announced that. So that's -- it's a marketable capability for us, and it broadens the number of customers and applications that we can serve. So we expect -- do expect that, that will broaden our opportunities in the A&D space to get more business and continue to grow that very attractive end market for us.
There are no further questions at this time. I will now turn the call back to Jenna for closing remarks.
Thank you for joining us today, and that concludes our call.
This concludes today's call. Thank you for attending. You may now disconnect.
Metallus — Q2 2026 Earnings Call
Metallus — Q1 2026 Earnings Call
1. Management Discussion
Good morning, and welcome to Metallus' First Quarter 2026 Conference Call. I'm Jennifer Beeman, Director of Communications and Investor Relations for Metallus. Joining me today is Mike Williams, Chief Executive Officer; Kris Westbrooks, President and Chief Operating Officer; John Zaranec, Executive Vice President and Chief Financial Officer; and Kevin Raketich, Executive Vice President and Chief Commercial Officer. You should have received a copy of our press release, which was issued last night.
During today's conference call, we may make forward-looking statements as defined by the SEC. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in yesterday's release. Please refer to our SEC filings, including our most recent Form 10-Q, which will be filed later today as well as the risk factors included in our earnings release, all of which are available on the Metallus website.
Where non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are included in the earnings release and the earnings presentation available on the Investor page at metallus.com.
With that, I'd like to turn the call over to Mike. Mike?
Good morning, and thank you for joining us today. I'm encouraged by our team's continued focus on operational priorities, which strengthened our performance in the first quarter. Demand continues to improve across our end markets, and our order book grew year-over-year, supported by overall industrial and defense demand, decreasing distribution inventory levels and onshoring. Section 232 tariffs continue to support our competitive position in the markets we serve. The April 2026 update to these tariffs apply only to downstream steel containing derivative products and do not affect our products, which are classified as primary steel. Most importantly, the 50% tariff on imported primary steel, including all long bar and tube products remains in place, reinforcing the long-term competitiveness of U.S. produced steel.
The capital investments and operational system improvements we implemented during the planned shutdown period in the fourth quarter contributed to higher melt utilization on both a sequential and year-over-year basis. Our strategic operational advancements achieved critical milestones during the quarter, highlighted by the safe and successful reheating and rolling of the first blooms from our new bloom reheat furnace. This achievement reflects the dedicated efforts of our internal teams and the support of the Department of War.
As a reminder, the new bloom reheat and roller furnaces facilitate more consistent reheating, improved product quality, and more efficient throughput. In fact, the bloom reheat furnace has recently demonstrated a run rate of approximately 150 tons per hour compared with approximately 100 tons per hour using our legacy assets, along with significant improvements in temperature uniformity. These modern and efficient assets position us to better serve growing customer demand across all end markets, and we anticipate they will also improve our operating leverage over time. We expect the bloom reheat furnace to be fully operational in early to mid-third quarter and the roller furnace to be fully operational in late third quarter.
We also continue to make meaningful progress in strengthening our operating systems, reinforcing consistent and efficient execution across the organization. These institutionalized systems help our teams identify issues faster and drive greater accountability. During the quarter, we expanded this framework into additional areas focusing on reliability and throughput. Safety remains a foundational priority for us and a critical factor in our long-term success. As always, we focus on eliminating serious injuries through stronger controls, training, and leadership accountability.
Our health and safety management system continues to mature with stronger proactive reporting, increased near miss identification, and targeted capability building in higher risk activities such as cranes, rigging, lockout tagout, and machine guarding. This shift towards leading indicators and the disciplined risk management reduces variability, lowers long-term costs and protects our most important asset, our people.
Turning to our first quarter performance. Shipments increased by 11% sequentially. Adjusted EBITDA for the quarter totaled $24.6 million, reflecting a 39% increase compared to the prior year's first quarter. Again, this strong improvement underscores our disciplined execution against key priorities and operational improvements. Lead times continue to expand, now reaching into the late third quarter for both bars and seamless mechanical tubing. This reflects strengthening demand for domestic steel and provides a clear signal of the momentum we expect to carry throughout 2026.
Turning to performance across our key end markets. We're seeing industrial customers take a more deliberate look at how and where they source steel as they navigate a challenging macro environment. Shifts in trade policy and the reassessing of supply chains are driving increased demand with domestic suppliers. With inventories low across the distribution channels and select products returning from offshore sourcing, we're seeing increased opportunities. We believe these dynamics position us well to strengthen new and existing customer relationships and continue gaining share as industrial markets stabilize.
Automotive demand remains steady with volumes up slightly compared to the prior year. Our automotive order book and key customer relationships remain strong, supported by our continued focus on light truck and SUV transmission programs and our success in winning new and emerging platforms. For example, during the quarter, we won 2 additional programs with existing customers, reinforcing our confidence in the strength of the automotive markets we serve and the importance of our automotive customers to our base business.
The energy markets we serve remain cautious as producers continue to seek greater confidence in long-term oil prices before materially increasing investments. Ongoing global conflicts and geopolitical uncertainty are contributing to volatility in energy markets. But favorable trade-related tailwinds reduced imports and a gradual increase in domestic oil and gas activity are creating incremental opportunities for Metallus.
Turning to aerospace & defense. This market continued to be a key source of strength during the quarter. Due to confidentiality, it's always difficult for us to call out new defense programs by name, but what I can say is that we were recently awarded an exciting contract with a new entrant in the defense supply chain to begin producing tubing for new rocket motors related to advanced weapon systems. Demand across defense programs continue to grow, supporting our near-term $250 million run rate revenue expectation and the longer-term strategic expansion in the market, allowing us to provide our expertise to existing and new customers in these critical applications.
While defense shipment timing can vary quarter-to-quarter based on program needs and downstream supply chains outside of our control, the underlying fundamentals remain strong in the foreseeable future. We continue to advance targeted investments and operational improvements to support higher defense volumes. Metallus is well positioned to benefit from growing defense spending and the continued focus on developing secure domestic supply chains.
Overall, we remain focused on disciplined execution in 2026. During the quarter, we improved operational performance, strengthened our internal systems, and safely advance strategic investments that support our long-term objectives. Our growing order book, improving operational execution, and U.S.-based manufacturing footprint provide a solid foundation as we move forward. We will continue to prioritize safety, operational discipline, and prudent capital allocation as we work to deliver consistent performance and long-term value for shareholders.
With that, I'll turn the call over to John to walk through our financial results in more detail.
Thanks, Mike. Good morning, and thank you for joining our first quarter 2026 earnings call. During the quarter, our team delivered improvements in shipments, net sales, and profitability on both a sequential and year-over-year basis, consistent with our expectations. As Mike noted, we also safely advanced operational and strategic investments to support near- and long-term business growth while maintaining a strong balance sheet. From a top-line revenue perspective, first quarter net sales totaled $308.3 million, a year-over-year increase of $27.8 million or 10%, primarily driven by higher shipments across most end markets.
Net income was $5.4 million in the first quarter or $0.13 per diluted share. On an adjusted basis, net income was $7.7 million or $0.18 per diluted share in the quarter. Adjusted EBITDA was $24.6 million in the first quarter, a year-over-year increase of $6.9 million or 39%. The increased profitability was primarily driven by higher shipments across most end markets, better price/mix, higher raw material spread, and better fixed-cost leverage on higher production volume, slightly offset by an increase in utility costs and a partial quarter of the cost increase related to the ratified union contract. As a reminder, our previous favorable electricity contract expired in May of 2025. So the first quarter of 2025 included a full quarter of lower energy costs.
As we noted in February, we expected a usage of free cash flow during the first quarter, which is consistent with historical seasonality as the first quarter normally requires a larger amount of pension funding and working capital build. Additionally, this year, our CapEx spend to complete the government projects is the highest in Q1 and is expected to ramp down throughout 2026. In the first quarter, capital expenditures totaled $24.7 million, including approximately $18.3 million of first quarter CapEx partially funded by the U.S. government. Planned capital expenditures for the full year 2026 are expected to be approximately $70 million, inclusive of approximately $35 million of capital expenditures primarily funded by the U.S. government.
At the end of the first quarter, the company's cash and cash equivalents balance was $104 million. As it relates to government funding, during the first quarter, the company received $5.9 million of cash funding from the government, with an additional $9.5 million received during the month of April based on our successful completion of key milestones. As a reminder, these funds are part of the previously announced nearly $100 million funding agreement in support of the U.S. Army's mission of increasing munitions production.
Additional government funding of approximately $2 million is expected to be received in 2026 to complete the government funding arrangements contingent on the achievement of the final mutually agreed upon milestone. As a reminder, this funding substantially paid for both the new bloom reheat furnace at the company's Faircrest facility as well as the new roller furnace at the Gambrinus facility.
Now switching to pensions. In the first quarter, the company made $19.8 million of required pension contributions, of which the majority related to the U.S. bargaining plan and reflects roughly 2/3 of the expected full year 2026 pension contributions. Subsequent to the first quarter, the company made a required pension contribution of approximately $5 million in April, with an estimated $5 million of required pension contributions expected for the remainder of 2026. Consistent with our expectations in February, total 2026 required pension contributions are expected to decrease by nearly 60% compared to 2025.
As part of the USW contract ratified during the first quarter, employees who are currently accruing a pension benefit will have a onetime opportunity between March 30 and May 30 to freeze their pension accrual and begin receiving a market competitive benefit under the 401(k) plan. These actions will allow employees access to their retirement funds earlier while also providing competitive defined contribution benefits and derisking the long-term pension obligation. As we continue to actively manage the pension, we'll provide further updates as available.
In terms of shareholder return activities, in the first quarter, the company repurchased approximately 277,000 shares of common stock at a cost of $4.3 million. At the end of March, a balance of $85.4 million remained under our existing share repurchase authorization. Since the inception of common share repurchases in early 2022, combined with the convertible note repurchase activities, we've reduced diluted shares outstanding by a significant 26% or 13.8 million shares. These actions reflect the strength of the company's balance sheet and confidence in through-cycle cash flow generation. As it relates to liquidity, total liquidity remains strong at $375 million as of March 31, 2026. Additionally, as of March 31, 2026, the company had no outstanding borrowings.
Moving now to near-term business outlook. Commercially, second quarter shipments are sequentially expected to increase modestly in the low single digits on a percentage basis, supported by continued strength in the order book and normal seasonality. Through the first 4 months of 2026, we announced a series of targeted price actions across our bar and tube portfolios. In bar, we implemented 2 actions totaling $120 per ton phased in based on customer promise dates. In tube, pricing actions were differentiated by size and product types, averaging about $100 per ton across the product mix. As a reminder, these pricing actions apply only to business not sold under annual price agreements and to new business, which historically represents approximately 30% of our total annual volume.
We expect price realization to be gradual with greater impact towards the second half of the year. Based on lead times and product mix dependent, second quarter price and mix are expected to be similar to the first quarter, with improvement anticipated in the second half of 2026. From an operational perspective, the company anticipates a sequential increase in its second quarter average melt utilization rate, supported by a strong order book.
Manufacturing costs are expected to improve sequentially by approximately $2 million in the second quarter as a result of higher melt utilization, resulting in improved cost absorption and net of the full quarter run rate cost increase related to the ratified union contract. And finally, an adjusted effective income tax rate between 27% and 30% is expected for the full year 2026. Given these elements, the company expects second quarter 2026 adjusted EBITDA to be modestly higher sequentially and year-over-year.
To wrap up, thank you to all of our employees, customers, and suppliers for their support. We're well positioned as a high-quality U.S.-based specialty metals producer supporting critical markets. As we continue to move forward in 2026, our focus is on safe execution to meet continued rising customer demand. We remain committed to delivering shareholder value through disciplined capital allocation and sustained profitable growth. As always, thank you for your interest in Metallus.
We would now like to open the call for questions.
[Operator Instructions]
And our first question is from the line of John Franzreb with Sidoti.
2. Question Answer
I'd actually like to start with the recent results reported. You touched on it in your prepared remarks about it's typically a working capital outflow quarter. But I was just curious about the sizable rise in inventory. Is that illustrative of any particular end market demand? Or are you building inventory for any particular reason? I'm just curious about that.
Yes. Hello, John. Pretty much we built inventory in Q1 based on the order book demand going into Q2 and with our lead times up to mid to late Q3, depending on product, we can see. So we're positioning inventory to service our customers. And we continue to see higher demand, as we mentioned. Year-over-year, the order book is about over 40% greater, which if you -- in a year-over-year comparison is about 90,000 more tons in our order book than we had this year last time. So we're positioning the inventory to meet the order demand that we have.
And then sequentially, you're suggesting that revenue is going to be up in the low single-digit range. I'm kind of curious, does that suggest maybe one of your key end markets is maybe a little bit slower than you would have thought, say, 3 months ago, especially considering the visibility you have in A&D?
I mean I don't see anything slower. It's just the timing of when the orders are requested and when we need to ship them on time, align with our throughput capability.
And one last question, I'll get back in the queue. Regarding the operational improvement of $2 million, I just want to make sure I kind of understand that properly. Is that improvement above the increased cost from the new union contract? Or is it net of the increased cost?
Yes, it's net of the increased labor costs with the new agreement, the labor agreement.
That's offsetting the wages.
So it's a net positive of $2 million of the wages. I just want to make sure I understand that.
Correct. Correct.
Your next question is from Samuel McKinney with KeyBanc Capital Markets.
Your first quarter auto shipments were up slightly year-on-year despite the negative SAAR comp. Could you just give us a little more color on your ability to outpace that figure and what you're hearing from the SUV and heavy truck customers moving into the summer?
Yes. I mean those are the predominantly the platforms that we're on, and those are the platforms that are drawing the demand where we've seen year-over-year order increases. So we expect that to be fairly stable at this point throughout the year with some typical seasonality towards the end of the year. So it's a matter of -- it's all about the platforms that we're on and the pull rate that they're requesting for their build rates of the powertrain and transmission programs that we're on.
Okay. I just want to turn to A&D and the Army investments. Given other commentary during this earnings cycle, it appears that the Army's munitions partner doesn't plan to begin production at this facility until sometime during 2027. How does that impact the timing for you to hit your previously stated goal of $250 million in annualized A&D sales this year?
I mean it definitely has the impact -- the overall impact of them getting to the 100,000 shells per month production, which then, of course, affects us. But what we are seeing is we have seen them ramp up their other facilities as well as we've seen some non-U.S. demand, but most of it is still in North America, it's just not in the U.S. and then the offshore inquiries and orders that we're getting.
So it affects it, but then we're working diligently to offset that with other weapon system applications. And we mentioned the one new program we just got. It will most likely ramp up to its full demand in 2027, but it will ramp up throughout the year this year, but really hit the peak cycles in '27 and '28. But we continue to work hard to get other programs to kind of offset the original planning process with a new facility coming online for the particular 155-millimeter munitions. But as I said earlier, we're seeing increased demand from existing facilities because they're really trying to ramp it up.
If you look at the math, and we kind of calculate it based on what we sell in those particular grades, they're operating around 70,000 shells a month right now versus their 100,000 target. But that's up from 50,000, 6 months ago. So we do anticipate as they continue to push the other facilities to improve their throughput and capacity that that will continue to modestly increase throughout the year. And then depending on timing when that other facility gets up and running, it's a win-win for us.
So is there any change to the outlook of hitting $250 million in A&D sales this year?
No, we still have that expectation, as we said in our comments. Yeah, there is some variability that we're working towards in the second half to fill some gaps because we were anticipating some type of ramp-up out of that, the one facility that still is being worked on to get it up and operational. So -- but we're still confident that we're going to hit that expectation. At least that, we strive for higher, as you can imagine, internally. But right now, we're confident that we'll meet that expectation.
And that's a run rate expectation. I mean some of this is a little bit lumpy to supply chain and order timing. But as we talked about last year, that $250 million is a run rate that we expect to achieve in the year.
Your next question comes from the line of Dave Storms with Stonegate.
Just wanted to start with getting your thoughts around lead times. I know you mentioned they go to the third quarter. For -- with the ramping of the bloom reheat furnace, could this maybe be the high watermark and maybe lead times might start to come down throughout the year? Or does the order book indicate that they might continue to increase?
Right now, everything we can see, here we sit in early May, is the fact that we expect it to continue to have really good demand. Now we do expect that the seasonality that occurs in the fourth quarter is going to be there, our maintenance outage, et cetera. But yes, right now, what we see, we're halfway through the third quarter. So orders continue to come in at a pretty good rate per week, and we expect that to continue. We just got to focus on our execution and serve our customers.
And then just also looking at the order book, a lot of strength there. Are you seeing more of the growth coming from maybe price and -- excuse me, more from price or maybe more from mix? Or is it volume that's expected to drive that? Just any commentary on maybe some of the profile of the order book.
Yes. I mean, overall, it's volume, okay? But our team does a pretty good job trying to manage and maximize the highest return value creation in mix as we can. I think the thing that we -- the area we see, automotive continue to be steady. We continue to expect growth in A&D and we expect energy, we've seen positive improvement in energy because of the trade environment and what we class it, call it reshoring, but it's really domestic sourcing of supply. So we expect that to potentially continue to modestly grow. As you can imagine, there's a lot of volatility with all the uncertainty, the global conflict, et cetera, affecting the energy market. So we have to watch that very closely and align with our customers the best way we can. I think the biggest area of opportunity we see the remainder of this year is really steady growth in the industrial end markets.
[Operator Instructions] Our next question is from the line of Aaron Reed with Northcoast Research.
One of the questions or the question I really have is, you mentioned that your old energy contract was expiring and you have a new one. I was wondering if you could give us any more insights into the terms around that. And is that something that's typically paid on spot? Or are those longer-term contracts?
Okay. So we did have a long-term contract that expired at the end of last May. So the contracts that we currently operate on, 70% of our electrical demand is fixed under a 2-year agreement, which we actually just began year well, the second 6 months of year 1, that will exist for 2 years. The other 30% is spot purchased.
And the other question I had is one of the things that we saw was the new tariffs that went into place here on May 1 for automotive. Do you expect that to have a meaningful impact on automotive demand? I know it's typically not what we're importing from Europe. Is there a real lot of overlap with what you're supplying to. But I just wasn't sure in the past, how has that impacted you? And does that give any insights on what the market might look like here going forward?
Well, we're heavily influenced based on build rates and platforms. So predominantly, most of our steel applications go into powertrains, particularly transmissions, crank shafts, et cetera. And we've heavily focused on SUVs and trucks. And those are the vehicles that are selling. That's why we're seeing good steady demand all last year throughout the volatility of the market regardless of imports. And this year, we see the same thing with incremental improvement.
What we are seeing is the move away from the high expected volume of EVs and what we are seeing is more hybrid demand, which is good for us because it has a combustion engine and has a transmission as well as electric motors. So that's kind of the move we've seen. I think it still plays good to us because we can play in all 3 of those platforms, ICE, hybrid, or EV. So I think we're in a good spot. Our team has done a pretty decent job of going after the right applications where typically the consumer price effect isn't as influenced based on price movements because these tend to all be high-end vehicles.
I'll now hand the call back over to Metallus as we have no further questions in queue.
Great. Thank you so much. And that concludes our call for today.
Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.
Metallus — Q1 2026 Earnings Call
Metallus — Q4 2025 Earnings Call
1. Management Discussion
Thank you for standing by, and welcome to the Metallus Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Thank you.
I'd now like to turn the call over to Jennifer Beeman. You may begin.
Good morning, and welcome to Metallus' fourth quarter and full year 2025 conference call. I'm Jennifer Beeman, Director of Communications and Investor Relations for Metallus. Joining me today is Mike Williams, Chief Executive Officer; Chris Westbrooks, President and Chief Operating Officer; and John Zanarec, Executive Vice President and Chief Financial Officer; and Kevin Raketich, Executive Vice President and Chief Commercial Officer. You should have received a copy of our press release which was issued last night.
During today's conference call, we may make forward-looking statements as defined by the SEC. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in yesterday's release. Please refer to our SEC filings, including our most recent Form 10-Q, our Form 10-K, which will be filed later today and the list of factors included in our earnings release, all of which are available on the Metallus webcast.
Where non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are included in the earnings release and the earnings presentation available on the investors page at metallus.com.
With that, I'd like to turn the call over to Mike. Mike?
Good morning, and thank you for joining us today.
In 2025, our specialty steel and multi-metal solutions saw a commercial recovery after market headwinds in the prior year. Demand improved across our end markets and a supportive fair trade environment reinforced the importance of domestically produced steel. On a year-over-year basis, shipments improved by 14%. Throughout the year, we expanded our aerospace and defense presence, including multiple new product offerings and strong growth in vacuum arc remelt or VAR steel. With an increased focus on downstream processing and the support of supplier partnerships, we met higher VAR demand and secured new A&D and industrial customers.
VAR sales totaled approximately $28 million last year, almost doubling from 2024. And Additionally, we maintained our intense focus on safety with initiatives like 0 incident planning, crew safety meetings, and our standup for safety program, actively involving more than 1,000 employees. Results included 0 serious injuries, a 35% reduction in days away or restricted cases and our injury frequency improved 11% year-over-year. A focus on strong leading indicators underscores a more proactive prevention-focused safety culture.
Furthermore, we received industry recognition for our commitment to safety, earning the Safety Culture Improvement Award from the Metals Service Center Institute. We will continue investing in safety training, prioritizing injury prevention through targeted programs such as cranes, rigging and fall protection. We also continue to invest in our people by building the skills we need for a changing industry.
Over the year, we strengthened both [indiscernible] and leadership skills, and expanded our co-op and the apprenticeship programs. To meet increased demand, we are actively increasing hourly staffing levels in targeted areas such as seamless mechanical to production. In parallel, we made organizational leadership changes to better align strategic priorities and support our growing order book across our Canton based assets.
In February, we reached a new 4-year contract with our local United Steel Workers Union. This contract reflects our shared commitment to safety, innovation and long-term competitiveness. It reinforces our strategic priorities and aligns with our disciplined focus on strong cash generation and sustained profitability across all market cycles. The contract offers our Canton based bargaining unit employees annual increases to base wages for the duration of the contract, competitive health care and retirement benefits for all members and a continued focus on employee well-being.
We are pleased with the collaborative outcome of these negotiations and thank the United Steelworkers and our Canton based employees for their constructive engagement. Moving to operations. We made significant progress in advancing our manufacturing capabilities and supporting our long-term growth strategy by completing the ramp-up for the new automated grinding mine.
Utilizing robotic technology, this new asset supports growing demand from our customers for high-quality SBQ products. We remain on track for the scheduled commissioning of the new bloom reheat furnace, roller hearth furnace and automated saw lines in the first half of 2026. These state-of-the-art assets will strengthen our ability to serve all our customers with high-quality specialty metals, enhanced production capability and improve first-time quality.
Turning to our fourth quarter financial results. Shipments declined by 15,100 tons or 9% sequentially. As expected, seasonality was a factor behind the decreased volumes with lower shipments across all end markets. Adjusted EBITDA for the fourth quarter was $2.4 million, below expectation due to lower volumes in addition to compressed raw material spread. Results were also negatively affected by a slower ramp up following our annual maintenance shutdown.
While we are not satisfied with our fourth quarter performance, we acted decisively throughout the quarter and into early 2026 to strengthen our operational foundation and position the business for improved execution going forward. During the planned shutdown period, we accelerated several long-term operational improvements, including extending select outages to ensure our facilities are prepared to ramp efficiently in 2026 with minimal disruption.
These actions support our ability to meet the growing demand reflected in our expanding order book. We also implemented targeted organizational and leadership changes to better align strategic priorities and sharpen our operational focus across all assets. In addition, we are increasing hourly staffing levels in the areas experiencing the most accelerated demand increases.
Finally, we are continuing to invest in the next stage of our operational capabilities through a standardized efficiency initiative, supported by an external expert partner aimed at enhancing throughput and improving high-quality steel output. These steps collectively position us to execute with greater consistency, capture growth opportunities, and we expect to deliver stronger performance in the year ahead.
Our lead times have extended reaching into mid-second quarter for bars and mid-third quarter for seamless mechanical tubing, and our order book has increased more than 50% year-over-year. This underscores the growing demand for domestic steel and serves as a clear indicator of improved momentum we expect to carry throughout 2026.
Turning to performance across our key markets. While industrial markets remain soft, the global trade environment is creating new opportunities as our customers reevaluate supply chains. Our distribution partners are also signaling concern about supply availability as inventories remain low, an environment that we believe will generate additional demand for reliable domestic suppliers like Metallus.
We believe we will continue to take market share in 2026. As we enter 2026, auto sales and production are both expected to be down slightly. And pricing pressure persists as OEMs prioritize margins and pass along tariff costs. Although affordability challenges, interest rates, tight credit and an EV slowdown could impact demand, our order book remains strong. This is supported by our solid position in light truck and SUV transmission programs, which have remained stable despite macroeconomic headwinds.
Energy shipments remain at a lower level sequentially, though we are beginning to see signs of improvement. Favorable trade-related tailwinds are helping us offset continued softness in drilling activity, creating opportunities for incremental sales. Aerospace and Defense outlook continues to be robust, with strong growth expected through 2026, driven both by expansion of existing programs and new platforms.
We will remain focused on safety, outstanding customer service, product development in aerospace and defense, and completing our ongoing government-funded capital investments. These priorities support our strategy for sustainable growth as we expect a much more robust 2026.
Now I'll turn the call over to John, who will provide more details on our financial performance and outlook.
Thanks, Mike. During 2025, our team delivered year-over-year improvements in shipments, net sales and melt utilization. We also advanced our transformative capital investments safely, on time and on budget, allowing us to continue to expand upon our strong foundation to drive further profitable growth while maintaining a healthy balance sheet.
Despite fourth quarter results coming in below expectations, as Mike mentioned, the underlying headwinds were temporary. During the last few months, we took decisive actions to implement operational enhancements that lay a solid foundation for 2026.
From a top line revenue perspective, fourth quarter net sales totaled $267.3 million, a sequential decrease of $38.6 million, mainly driven by normal seasonality, but also impacted by a slower-than-expected ramp-up following annual shutdown maintenance. The fourth quarter GAAP net loss was $14.3 million or a loss of $0.34 per diluted share. On an adjusted basis, the net loss was $7.7 million or a loss of $0.18 per diluted share in the quarter.
Adjusted EBITDA was $2.4 million in the fourth quarter, primarily impacted by higher manufacturing costs due to a $10 million sequential increase in annual shutdown costs and lower fixed cost leverage as expected due to planned shutdown exercises during the fourth quarter.
Shipments were lower than our expectations by around 10,000 tons due to several factors, including customers managing year-end inventory, certain customer logistics challenges, and a slower ramp-up following our annual maintenance shutdown, which included accelerating several long-term operational improvements.
In addition, as a result of compressed scrap market prices, we experienced lower raw material surcharge revenue than expected of approximately $4 million. At the end of the fourth quarter, the company's cash and cash equivalents balance was $156.7 million. During 2025, we generated $16 million of operating cash flow. And when excluding pension contributions, operations produced $80 million in cash in 2025. This marks the second consecutive year in which operational cash generation exceeded $80 million on this basis.
These results provide compelling evidence of the structural transformation of Metallus demonstrating our ability to consistently deliver strong cash flows through the cycle. In the fourth quarter, capital expenditures totaled $35.3 million, including approximately $30 million of fourth quarter CapEx, related to government expenditures. Planned capital expenditures for the full year 2026 are expected to be approximately $70 million, inclusive of approximately $35 million of government-related capital expenditures, of which we are contributing approximately $15 million to $20 million of our own money as part of the collaborative partnership.
As it relates to government funding, during the fourth quarter, the company received $4.1 million of cash from the government, as part of the previously announced nearly $100 million funding arrangement in support of the U.S. Army's mission of increasing munitions production. To date, through the end of December, the company has received $85.6 million of government funding, of which $32.1 million was received in 2025. Additional payments of approximately $70 million are expected to be received in the first half of 2026, contingent on the achievement of mutually agreed upon milestones. As a reminder, this funding has substantially paid for both the new bloom reheat furnace at the company's Faircrest facility as well as a new roller furnace at the [indiscernible] facility.
Now switching to pensions. In the fourth quarter, the company made a required pension contribution of $3.5 million related to the U.S. bargaining plan, as previously guided. During the first quarter of 2026, the company expects to make required pension contributions of approximately $15 million to $18 million related to the U.S. bargaining plan, a significant reduction compared to the first quarter of 2025.
Full year 2026 required pension contributions are expected to total approximately $27 million, representing a nearly 60% reduction from 2025 total pension contributions. We continue to actively manage the pension within our balanced capital allocation approach, and we'll provide further updates as available. In terms of shareholder return activities, in the fourth quarter, the company repurchased approximately 71,000 shares of common stock from $1.2 million.
At the end of December, a balance of $89.7 million remained under our share repurchase authorization. Since the inception of common share repurchases in early 2022, combined with the convertible note settlement activities, we've reduced diluted share outstanding by a significant 25% or [ 13.5 ] million shares compared to the fourth quarter of 2021. These actions reflect the strength of the company's balance sheet and confidence in through-cycle cash flow generation.
As it relates to liquidity, total liquidity remained strong at $389 million as of December 31, 2025, with no outstanding borrowings. We do expect a slight usage of free cash flow during the first quarter of 2026, which is consistent with historical seasonality as the first quarter normally requires a larger amount of pension and bonus funding.
Additionally, this year, our CapEx spend to complete the government projects is the highest in Q1 and ramps down throughout 2026. After the first quarter, we expect quarterly free cash flow to be positive for the remainder of 2026. As we look to the near-term business outlook, commercially, first quarter shipments are expected to increase by approximately 10% compared with the fourth quarter, primarily due to strength in the order book and a step-up in operational performance after the fourth quarter shutdown set us up for a strong start to 2026.
As Mike mentioned, our order book continues to build and is up 50% compared to the same time last year. Annual price agreement negotiations, which cover approximately 70% of the order book are substantially complete. Average base price per ton is anticipated to increase slightly year-over-year, mix dependent. The company recently implemented spot price increases on both bar and seamless mechanical tubing products not covered by an annual pricing agreement.
These increases are effective throughout the second quarter and early third quarter, product dependent. Based on lead times, pricing benefit and product mix improvements are expected to ramp each quarter of 2026.
From an operational perspective, the company anticipates a sequential increase in its average melt utilization rate, supported by limited planned shutdown activity during the first quarter, greater stability and reliability across key assets, along with steady customer demand.
As a result, manufacturing costs are expected to sequentially improve by approximately $10 million in the first quarter, following the completion of planned shutdown maintenance in the fourth quarter and improved cost absorption from higher first quarter melt utilization.
Additionally, as Mike just mentioned, United Steelworkers recently ratified a new 4-year labor agreement with Metallus. The new labor agreement provides an increase in wages of 5% per year as well as additional premiums for specialized roles, which allows us to attract the right talent for our growing business demand.
The agreement also adds flexibility to manage future pension obligations while offering competitive defined contribution plan alternatives. As part of the agreement, a onetime payment of approximately $2 million will be paid in the first quarter.
Taking these factors into account, we expect first quarter adjusted EBITDA to be above fourth quarter levels, reflecting our typical seasonality and supported by a solid order book. For the full year, we expect continued market demand for our solutions, flat depreciation and amortization expense and a low single-digit increase in SG&A expense. While we remain mindful of external variables, we currently anticipate delivering year-over-year adjusted EBITDA growth in each quarter of 2026.
To wrap up, thank you to all of our employees, customers and suppliers for their support. We are firmly positioned as a high-quality U.S. specialty metals producer, serving critical end markets. As we head into 2026, with a growing order book, our focus is on safe execution to meet rising customer demand. We remain committed to delivering shareholder value through disciplined capital allocation and sustained profitable growth. As always, thank you for your interest in Metallus.
We would now like to open the call for questions.
[Operator Instructions] Your first question comes from the line of John Franzreb from Sidoti & Company.
2. Question Answer
I'd like to start in the fourth quarter, there was an expectation of $3 million to $5 million of costs flowing through the P&L from labor negotiations. I'm curious how much you incurred in the -- not only the fourth quarter but have already incurred into the first quarter of 2026?
We didn't really occur any additional costs from the outcome of the labor negotiations because the agreement was not settled until early February. However, there is a payment due, which John outlined for about $2 million this quarter, plus they are starting to get the new wage increase that was agreed to in the first year of the contract.
So we will see higher labor costs going forward compared to 2025, and then there's that one payment that they earned throughout the negotiation process.
Reference -- that $2 million reference for Q1 was -- could have been timing impacted in Q4, but it is...
Yes. We would have had the contract settled last year, but it wasn't.
Right. So that $2 million is still going to flow to the P&L, it's not going to be a onetime item, correct?
Well, it's a onetime item, but it will flow through the P&L in Q1.
Right. Got it. Okay. Understood. And regarding your expectations of melt utilization improving through the balance of the year, is that solely volume dependent? Or are you baking in any expectations from that third-party advisory program into that expectation?
Both -- we're relying on both. We have a much stronger order book entering 2026 than we had last year. And everything we're hearing from our customers, with our annual contract negotiations pretty much settled. Things look fairly robust and continue to build throughout 2026, both from a demand volume perspective and our execution.
That's actually a perfect segue into my next question. I was just curious about with the order book up 50% year-over-year. How would you characterize the 2026 demand relative to what you thought it was going to be, say, 3 months ago?
Well, we got signals as we went through the 3- to 4-month process of annual negotiations that there were separate from the A&D. The A&D is going to continue to go through -- grow throughout the year, and I'll give you a little color on that. But the automotive programs that we're on really around our transmission offerings and the platforms that we're on, we see our auto business being steady compared to 2025 -- the second half of 2025 throughout 2026 at this point.
We are seeing some increased demand compared to last year. And I would say, on a certain isolated focus base in the industrial end markets. I think we just got to see how the overall economic activity for the United States develops throughout the year. And we do expect isolated improvements in demand on some of our very large industrial customers throughout 2026.
Energy, really, as we said in our opening comments, a favorable trade -- a favorable and fair trade environment is driving some opportunity in the energy space, even though the drilling activity, which is a majority of where our applications go, is not increasing, it's been fairly stable. It's really the A&D that's going to drive a lot of the growth for us in 2026.
A number of our large A&D OEMs have already place full year POs with us. And so we can see the future rising of that demand. However, there is some dependency, particularly in the munition side where the down -- our OEM customers have made major investments to increase their capacity, that capacity has to ramp up all the signaling we get is that's going to happen, but it's about 1.5 years, 2 years late.
So -- but we do expect to see that, that's going to drive further demand growth throughout 2026 in our A&D, with that dependency on that capacity ramping up to take our product offerings. And then thirdly, in the A&D space, it's really we've gotten over 5 -- half a dozen new customers in the fourth quarter for programs in 2026. Majority of that is the bar material that we spoke about earlier in our comments. But we're also continuing to work on getting new platforms and working with new customers.
So we're pretty excited about what -- where we're positioning, how we're positioning the successes that we've had in getting new programs and how that's going to help drive profitability growth for us in 2026.
Just to follow-up to what you said. Is there any change in your expectations in the A&G contributions in 2026 versus your initial expectations?
No, I think we kind of -- we're assuming where our A&D pricing's been is just going to continue to roll forward. But the higher mix influence of that in our sales revenue will drive profitability -- improved profitability growth for us in 2026.
Okay. I'll get back in the queue.
All right. Thanks, John.
Your next question comes from the line of Phil Gibbs from KeyBanc Capital Markets.
And Mike can you just curious on where you expect A&D sales in 2026. I know prior, you thought you'd be above a $250 million run rate on sales by mid-2026, and then also the status of your key capital investments and when those are going to be commissioned and deployed?
Sure, sure, sure. So it's early in the year, but like I said to John earlier, we've already gotten several POs from our largest A&D OEM customers. So we see their full year demand. We still are believing that we're going to hit that run rate, but it is dependent on the new capacity ramping up for the munitions manufacturing downstream from us. So as that ramps up, which were being signaled that, that's going to continue to ramp up throughout this year. we still expect to hit that at some time, either early second half. It could move based on their ramp-up success, but we still believe we're on target to hit that $250 million run rate at this point in the year.
And then just regarding the status...
Yes. Things are going pretty good there. We did have some weather delays between late in the fourth quarter, early this quarter. But we're pretty much on target. The bloom reheat furnace, we've lit the furnace. We've cycled and simulated pushing blooms through the furnace. We expect to start to put that in operation in the next month to 5 to 6 weeks to get that, and we'll start to ramp that up throughout the remainder of the first quarter and early second quarter.
The rotary or the -- the roller hearth furnace, we are on time with that. We expect to like that furnace up towards the end of the first quarter, early second quarter. We expect to have both assets up and -- ramped up to production by late second quarter, early third quarter.
And then a question for John, just on the share count and also the DNA. So on the diluted share count, it looked like they were down about over 1 million shares quarter-on-quarter. I know buybacks were limited. So anything that would have driven that over that buyback number. So just curious in terms of what we should be using moving forward? And then also on the D&A, you said flattish year-over-year, but you do have commissioning of new assets. So just curious why that would be flat and not increasing as you're putting more assets to use.
Yes. No, good questions, Phil. So on the dilutive shares impact, it will be up a little bit, maybe about 1 million or so in 2026 because of the net loss position on the U.S. GAAP basis. So the number to use would be a little bit. If you're looking at GAAP versus non-GAAP. But we do plan to continue to do share buyback to offset equity comp dilution. So it would be fairly flat if you're using an adjusted basis. But our GAAP net losses sometimes makes that a little bit interesting to look at our diluted shares. As far as the depreciation and amortization.
Recall, it's only $15 million to $20 million of our own money. And so as that's actually hitting our depreciation, the -- the depreciation and amortization for the government funding, there is none. There's no depreciation and amortization. So as we have some assets falling off every year, the new capital spend for our base business, which is pretty consistent, we'll just replace that. So that's basically why D&A will stay flat.
[Operator Instructions] Your next question comes from the line of Dave Storms from Stonegate.
So I want to go back to some of the customers -- want to go back to some of the customer growth you've seen in VAR. Is there anything more you can tell us about maybe the types of customers here with them being new customers to sort of potential to expand within their operations, just anything more you can give us there?
Well, if you look at the VAR -- majority of the VAR goes into a variety of aerospace and defense, more defense than aircraft, let's say, but it's a variety, and it's a growing product line for us. So we really can't talk about the customers themselves or the end applications on a variety of weapon systems and military technologies that these products are going into due to the confidentiality requirements, but we're pretty excited about it.
That we've also won new -- some new customers and applications with VAR in the industrial space. So these are high-end equipment applications that the VAR materials specifically designed for. And we're pretty excited to the fact that now we're expanding outside of the A&D with this product offering. And we just expect it's going to continue to grow. We have a great supplier partner, and we're building a very credible customer base with some pretty exciting end applications.
Understood. Appreciate that color. And then just one more on lead times. It looks like about 3 to 6 months on lead times right now, or maybe a little bit longer. Would you expect that to come in as you ramp the new assets as you just laid out? And I guess is there a potential then to increase sales and maybe get those lead times to stay the same.
Yes. If you look at our seamless mechanical tubing, that's the one that's out the furthest, that's early August. We are adding an additional crew and we naturally -- and we are making some investments in some of the key assets involved with our tube making process. And so as those investments ramp up and the additional shift comes on here in early March, we do expect to bring those lead times in because our availability of product and customers will increase.
The bar is -- it is what it is. We've seen a pretty good increase in demand, and we're going to try to keep our lead times as competitive as possible. We do believe the new assets are going to help with better quality, right the first time, higher efficiency and throughput. And as those assets ramp up, we specifically believe that. That will also make sure that we have competitive lead times, and we really -- right now, as we see a much larger order book, it allows us to be more efficient with our planning and scheduling across our key bottleneck assets.
So things are looking very positive for us, and we expect to deliver, as I said, much better results throughout 2026.
And that concludes our question-and-answer session. I will now turn the call back over to Jennifer Beeman for closing remarks.
Thank you all for joining us today. We look forward to updating you in the future. And that concludes our call.
This concludes today's conference call. Thank you for your participation. You may now disconnect.
Metallus — Q4 2025 Earnings Call
Metallus — Q3 2025 Earnings Call
1. Management Discussion
Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2025 Metallus Inc. Earnings Call. [Operator Instructions]
I would now like to turn the call over to Jennifer Beeman. Jennifer, please go ahead.
Good morning, and welcome to Metallus' Third Quarter 2025 Conference Call. I'm Jennifer Beeman, Director of Communications and Investor Relations for Metallus. Joining me today is Mike Williams, Chief Executive Officer; Kris Westbrooks, President and Chief Operating Officer; John Zanarec, Executive Vice President and Chief Financial Officer; and Kevin Raketich, Executive Vice President and Chief Commercial Officer. You all should have received a copy of our press release, which was issued last night.
During today's conference call, we may make forward-looking statements as defined by the SEC. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in yesterday's release. Please refer to our SEC filings including our most recent Form 10-K and Form 10-Q and the list of factors included in our earnings release, all of which are available on the Metallus website. Where non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are also included in the earnings release.
With that, I'd like to turn the call over to Mike. Mike?
Good morning, and thank you for joining us today. I want to start with safety. Throughout the year, we've been dedicated to our mission of being recognized as having the safest specialty metals operation in the world. In line with this mission, we continue to make substantial investments in the safety of our people.
We remain on track to spend $5 million to further enhance our safety management systems and critical equipment this year. To date, in 2025, we've had 0 serious injuries. These are events which are life-threatening or life altering. We have also had a 15% reduction in days away and restorative work cases and a 34% reduction in lost and restricted work days compared to the same period a year ago.
In October, we successfully completed our planned annual maintenance shutdown at the Faircrest facility. These shutdowns are highly coordinated efforts involving collaboration between our teams and external contractors. Over the course of 9 days, we performed essential maintenance to ensure the 2026 reliability and performance of our melt shop assets. Most importantly, I'm proud that the Faircrest shutdown was completed without any serious safety incidents. As a reminder, we will see additional shutdown activities in our other facilities in the late fourth quarter.
Customer feedback continues to reaffirm the strength of our service and quality. We recently wrapped up our annual customer survey. And I'm pleased that over 97% of respondents said they would recommend Metallus products to others, a testament to the exceptional work our teams deliver every day. As expected, the survey showed that most customers prefer buying steel made in the United States, and it's a key factor in their purchasing decision.
We're seeing continued interest from both new and long-standing customers who are actively shifting toward domestic supply chain solutions. So far in 2025, we successfully sold to over 2 dozen new customers, which will contribute to the future business growth. In addition, we saw a substantial year-over-year increase in our overall order backlog. Specifically, aerospace and defense backlog is up approximately 80% compared to a year ago.
As we enter the final quarter of the year, we've begun our annual commercial contract negotiations. Our goal remains to secure approximately 70% of our long products business through annual agreements. While we're in the midst of negotiations, customer conversations have been encouraging for 2026.
Now turning to business results. for the third quarter. Despite shipments being down slightly from the second quarter, sales increased as a result of favorable product mix with continued expansion in the aerospace and defense end market. On a year-over-year basis, shipments in the third quarter improved by 36%, driven by broad-based improvements across all end markets.
Our current lead times extend to late January for our SBQ bars and February for our seamless mechanical tubing products. Adjusted EBITDA rose sequentially to $29 million, driven by our growing participation in the aerospace and defense end market and stability across the other end markets. Additionally, higher levels of production during the quarter resulted in greater fixed cost leverage.
Now let's cover some of the third quarter highlights of our specific end markets. Industrial shipments decreased slightly in the third quarter on a sequential basis. Distribution customer inventories have improved, but still remain lean and in line with demand. Several key customers have indicated plans to ramp up operations and are projecting stronger forecast for 2026, while others remain cautious, closely monitoring year-end inventory levels.
Automotive shipments increased slightly on a sequential basis. Key automotive customer demand was solid throughout the quarter, and we have not yet experienced any disruption due to global supply chain challenges. Energy shipments remain at reduced volumes on a sequential basis. With import levels declining and tightened enforcement of tariffs, we are beginning to capture greater customer share for 2026. However, overall energy market conditions still remain subdued.
Finally, higher shipments in aerospace and defense contributed to a favorable product mix this quarter. We continue to gain traction across both new and existing programs., ,all supporting our targeted annual A&D sales run rate of $250 million by mid-2026.
In the quarter, we added several new customer opportunities for our specialty bar and tubing products for applications, including new munitions programs, gun barrels and aerospace bearings. We also recently secured prototype orders with multiple customers that once fully commercialized, will utilize Metallus' carbon and specialty alloys and newer warheads and in rocket motor casings. These are applications where strength, efficiency, quality and shorter lead times are critical.
Today, Metallus supports several dozen defense programs with growth coming from both traditional prime contractors and emerging industry producers. We are on track with the construction of bloom reheat and roller furnaces, both assets will increase our capability and optimize our throughput. We remain optimistic about the future in the growing aerospace and defense market.
Turning to another bright spot. We are focused on growing our participation in the vacuum arc remelt or VAR steel product line. We recently executed a long-term supply agreement with a trusted partner for VAR Steel, strengthening our strategic position and securing a reliable high-quality material stores to support ongoing sales and profit growth.
Before I turn it over to John, I'd like to provide a brief update regarding our labor negotiations. As we announced on October 30, members of our local USW have voted not to ratify the tentative labor agreement we had reached with the union Negotiating Committee. While we're disappointed by the outcome, we remain committed to securing a fair agreement that supports our employees and aligns with Metallus' long-term strategic goals. The current contract has been extended by 90 days to January 29, 2026, and we expect our operations to continue without disruption. We appreciate the support of our shareholders, the trust of our customers and the dedication of our employees as we look forward to a stronger 2026.
Now I'd like to turn the call over to John.
Thanks, Mike. Good morning, and thank you for joining our third quarter earnings call. During the quarter, our team delivered sequential increases in net sales, melt utilization and profitability consistent with our earnings guidance. We also advanced our capital investment safely, on budget and on schedule.
As it relates to our top line, third quarter net sales totaled $305.9 million, a sequential increase of $1.3 million, primarily driven by higher shipments in aerospace and defense and steady volume across auto and industrial end markets. Net income was $8.1 million in the third quarter or $0.19 per diluted share.
On an adjusted basis, net income was $12 million or $0.28 per diluted share. Adjusted EBITDA was $29 million in the third quarter, a sequential increase of 9% primarily driven by improved product mix and continued improvement in melt utilization, driving better fixed cost leverage. This marks the fourth consecutive quarter of sequential growth in both net sales and adjusted EBITDA, underscoring the consistency of our commercial execution, improving operations, sustained demand in our core markets and our focus on growing in aerospace and defense.
During the third quarter, operating cash flow was $22 million, primarily driven by profitability, partially offset by a slight increase in working capital needs to support the growing business. At the end of the third quarter, the company's cash and cash equivalents balance was $191.5 million, inclusive of approximately $21 million of government-funded cash on hand for future outlays as we finalize our capital projects funded by the U.S. government.
In the third quarter, capital expenditures totaled $28.4 million, including approximately $22 million of third quarter CapEx and supported by previous government funding. Planned capital expenditures for the full year 2025 are approximately $120 million, slightly lower than previous guidance due to timing of cash payments.
The full year CapEx guidance includes approximately $90 million of spending, which was funded by the U.S. government, consistent with our previous guidance and the continued successful execution of the projects.
As it relates to government funding, during the third quarter, the company received $10 million of cash from the government as part of the previously announced nearly $100 million funding agreement in support of the U.S. Army's mission of increasing munitions production.
To date, through the end of September, the company has received approximately $82 million of government funding with an additional $4.1 million received in October. Receipt of the remaining committed government funding is expected in early 2026, as mutually agreed upon milestones are achieved.
As a reminder, this funding will substantially pay for both the new bloom reheat furnace at the company's Faircrest facility and the new roller furnace at the Gambrinus facility.
In terms of shareholder return activities, in the third quarter, the company repurchased 178,000 shares of common stock for $3 million. At the end of September, a balance of $90.9 million remained under our share repurchase authorization.
Since the inception of common share repurchases in early 2022, combined with the convertible note repurchase activities, we've reduced diluted shares outstanding by a significant 25% or 13.5 million shares compared to the fourth quarter of 2021. These actions reflect the strength of the company's balance sheet and the confidence in through-cycle cash flow generation. As it relates to liquidity, total liquidity remained strong at $437 million and no outstanding borrowings as of September 30, 2025.
Turning to our near-term business outlook. Commercially, fourth quarter shipments are expected to be 5% to 10% lower than the third quarter, primarily due to normal year-end seasonality and customers' potential global supply chain challenges. Base price per ton is anticipated to increase slightly as we realized the previously announced bar and 2 price increases of 5% that will take effect through the fourth quarter.
Product mix is expected to be less favorable than the third quarter due to the mix of sales within the industrial and aerospace and defense markets, which is primarily timing related. In summary, commercially, we expect lower shipments and slightly weaker product mix compared to Q3, slightly offset by increased base price per ton but the net impact is expected to be a $2 million to $3 million adjusted EBITDA sequential headwind.
From an operational perspective, annual shutdown maintenance in the fourth quarter will be approximately $11 million, a sequential increase of approximately $8 million from the third quarter. The planned annual shutdown maintenance timing and the normal fourth quarter commercial seasonality will result in a decrease in melt utilization from the 72% achieved in the third quarter and is anticipated to result in a sequential decrease in fixed cost leverage of approximately $3 million.
And finally, depending on the status and timing of a new labor agreement, we could also face additional labor and benefit costs that could result in a sequential fourth quarter cost increase.
Given these elements, the company expects the fourth quarter adjusted EBITDA to be lower than the third quarter, primarily driven by our normal year-end seasonality, planned annual shutdown maintenance costs and timing and a few potential customer global supply chain challenges. As compared to the fourth quarter of 2024, we expect adjusted EBITDA to improve slightly.
To wrap up, thank you to all of our employees, customers and suppliers for their support. We're well positioned for a successful 2026 and beyond as a high-quality U.S.-based specialty metals producer supporting critical markets. We remain committed to delivering value to our shareholders by driving profitable growth and executing our capital allocation strategy.
As always, thank you for your interest in Metallus. We would now like to open the call for questions.
[Operator Instructions] Your first question comes from the line of John Franzreb with Sidoti & Company.
2. Question Answer
I'd like to start with the automotive business. It was up nicely on a year-over-year basis. And last quarter, you talked about regaining share domestically. I'm curious if that's the case. And I have a follow-up to that when you answer it.
Sure, John. Thanks for asking the question. Yes, I mean if you look at the platforms, that we're on, those are the typically the SUVs, trucks, et cetera, that continue to sell at a decent rate. And they actually -- the auto companies were giving us a forecast that they thought the quarter would be lower, but that didn't materialize.
So people are still buying vehicles. They're still having to build transmissions and motors, et cetera, to supply those vehicles, and that's our sweet spot. So we'll see how the fourth quarter develops. We do expect seasonality from them. And then there are some risks of some supply chains in the fourth quarter, their supply chains disrupting potentially vehicle production at the level that we saw in Q3. Does that answer your question?
Yes. And when you referenced supply chains, you actually said global. So I'm curious, are you referencing specifically the Ford problems? Or is there something more to it?
Well, there's concern or at least there's been public voice concern over chip supply and other issues with their supply chain. So -- but yes, Ford is the one that stands out because we've seen a lot of that in the public press reporting.
Okay. And regarding the $3 million to $5 million that you expected to incur with the labor negotiations, how much did you incur in the third quarter relative to your expectations?
Barely nothing except for our cost to negotiate. A lot of those -- that $3 million to $5 million is tied on the final negotiations. So more to come yet on that.
Fair enough. And have you seen any impact from the tariffs? We talked a little bit about last quarter that there was kind of a wait-and-see status. I wonder if you've seen customers gravitate more to reacting to the tariff environment. And maybe another thought on that is, does the government shutdown impact maybe the A&D business at all?
No, we've seen no A&D impact. This is the #1 priority is national security, and they need the volumes of munitions and weapons programs supplied. So no, we've not seen any impact on that. What was the first part of your question?
Any impact from tariffs on customers? Last quarter, you kind of said there was a wait and see...
Actually, I mean, the tariffs environment has been favorable to us. We are taking new customers. We've seen new customers come in. And we've seen a tremendous amount of inquiry activity for 2026, where more people are trying to position the domestic supply chain as you heard us in our comments. So from a commercial sales perspective, it's been fairly -- pretty positive. It's just the rate of speed in which that domestic awards are made. But there is a negative in the fact that we are seeing some tariff impacts on certain materials that we purchase offshore for our operating supplies and manufacturing.
Your next question comes from the line of Phil Gibbs with KeyBanc Capital Markets.
Mike, the -- and I know you talked a little bit about that with the last question, but what are exactly the global supply chain challenges you're mentioning? Is that more so -- is that more so with automotive and Ford? Or is there more to it? Just wanted some context?
No. I mean there's been information out there that we've been told that there is concern over, again, some chip supply. Of course, you know the impact to the Ford F-150 with the aluminum supply domestically. So those are kind of things that we're aware of. We haven't seen that impact yet, but that's a potential going forward. So we just want to put it out there. Honestly, it's just a timing issue. So whatever they don't produce, they will produce because they want to meet sales targets, et cetera, for 2026.
Got it. And with your commentary of improved year-over-year EBITDA in the fourth quarter, does this contemplate any of the potential employee contract negotiations? Or would that be separate to that commentary?
Well, I'm not quite clear what your question is. We've identified if we do get a contract settlement -- in the fourth quarter, we're going to see those outlined costs that John referenced in his comments. .
And we didn't quantify it yet, but I think there would be potentially some additional costs. It really depends on the timing.
Yes. It's all about timing. I mean right now, we have an extension until January 29. We just -- we're going to work hard to negotiate a fair and equitable contract and align with our longer-term strategic objectives.
Your next question comes from the line of Dave Storms with Stonegate.
I want to start with the energy end market here. What do you see as a potential for volumes to rebound over 2026?
Well, I mean a lot of it's driven by the price of oil and overall global demand, right? I think there are some other influencing factors like what sanctions and how effective sanctions against Russian oil are. And would that increase domestic production in North America? And then we would -- we most likely would benefit from that increased production, higher oil prices tend to drive increased production too.
Other areas where as these LNG plants come on over the next couple of years that they're building, that will drive gas consumption, pipelines, et cetera, or natural gas production et cetera, to feed the global markets that they're targeting, that's all positive stuff for, but that takes time.
We are seeing where we're -- actually probably where we're seeing potential increases in 2026 is that energy end market has historically procured a lot of SBQ into offshore and those tariffs are starting to affect their thinking and their buying strategy. So we've seen a tremendous amount of inquiries for 2026 for our energy end markets and customers.
Understood. That's very helpful. Turning to your order book. Just curious as to how you feel it's tracking relative to this point last year? I know you mentioned you want to be about 70% booked going into the year. Do you feel like you're on pace to meet that goal relative to last year? Or just maybe were do things stand there?
Yes. We're pretty strong believers that we're going to get to that 70%. It could be a little bit higher depending on the pricing landscape. We are seeing customers telling us, not every customer, but some key customers telling us their internal production forecast for next year are going up, and we see them asking for more volume for 2026. So we're very happy about that, and we look forward to delivering an even better 2026.
Understood. That's very helpful. And then just maybe one more for me. I know last quarter, we talked about energy input prices and that you were working on a new negotiation there. Would just love to hear where that stands going into the new year.
I think the biggest one is electrical energy. And we had a long-term contract that expired in May of this year, and we had to go to market. I can tell you that prices -- market prices change significantly for the time of that really nice electrical energy contract we had. So yes, and we've been transparent that we're seeing cost increases on our electrical energy purchases.
We currently have a 2-year agreement for a large portion of our requirements, but there is a small portion that's exposed to market pricing, and we'll watch that very closely. We have many projects in the pipeline to work on reducing our electrical energy consumption and let alone also increase our efficiency of production with how much electrical or kilowatt per ton we use.
And on the natural gas side, we're purchased forward for 70% to 80% of our needs for next year. And we actually probably are out 5 years at various supply requirements, but we're an active buyer in the market, and we're very opportunistic. So we looked for the best competitive prices we get and position ourselves for the best cost in those unit prices for both electricity and natural gas.
Yes. And Dave, real quick, one thing to add to that, what Mike was saying on electricity is we -- if you recall at the end of Q2, we said $2 million to $3 million of sequential cost increase, that's what we experienced. So we kind of guided that, and that's what we saw. And that's aligned with the contracts that we've lined up for the next 2 years.
[Operator Instructions] Your next question is a follow-up from John Franzreb with Sidoti & Company.
I'm just curious about the CapEx spend. You dropped it down a little bit this year. What does next year look like?
Well, we're in the planning phases of that right now. The reason why we dropped down the forecast is it's all about timing. It's tied to completion of work as well as payment terms tied to after that completion and how long before we have to pay them. So it's all a timing issue. On the -- for 2026, we're in the planning phases right now, John. So we'll talk more to that early next year.
Okay. And if I recall, you brought in a third party to help you maybe with your floor operations. Any kind of progress you can report about that and how that's going?
Yes. We're very pleased with the progress, and you're going to start to see those results throughout the remainder of this year. The project is not over, but we're very pleased with the outcomes of the findings, the improvements that they're assisting with and helping my team implement them. This project goes on until late March. So a lot of those benefits will be realized in 2026.
Actually helpful. And I guess lastly, on the new A&D awards, maybe any additional color you want to provide and maybe the timing of revenue recognition or material revenue recognition from those jobs?
Yes. We're starting to actually see some of that now, particularly in the VAR VIM sales that continues to grow, which is just value creation for this company. And that's only going to continue to grow in 2026. We expect the munitions to continue to build demand build as some of the downstream supply chain issues get resolved throughout the end of this year and early next year.
And then we're getting awarded as we commented earlier, a number of new programs, weapons programs, gun barrel programs, aircraft bearings, et cetera, that demand and the realization of that value growth is really going to materialize in 2026, in my view, as a notable rate. And like we said, our objective overall was to achieve or exceed a run rate of $250 million a year of revenue, and we're very confident that we'll hit at least that in 2020 -- by mid-2026.
That concludes our question-and-answer session. I will now turn the call back over to Jennifer Beeman for closing remarks.
Thank you all for joining today, and that concludes our call.
Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
Metallus — Q3 2025 Earnings Call
Financial data from Metallus
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 1,223 1,223 |
16%
16%
100%
|
|
| - Direct Costs | 1,122 1,122 |
15%
15%
92%
|
|
| Gross Profit | 100 100 |
30%
30%
8%
|
|
| - Selling and Administrative Expenses | 93 93 |
3%
3%
8%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | 63 63 |
51%
51%
5%
|
|
| - Depreciation and Amortization | 56 56 |
1%
1%
5%
|
|
| EBIT (Operating Income) EBIT | 7.50 7.50 |
158%
158%
1%
|
|
| Net Profit | 8.10 8.10 |
136%
136%
1%
|
|
In millions USD.
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Company Profile
TimkenSteel Corp. engages in the manufacture of alloy, carbon and micro-alloy steel products. It includes special bar quality steel, seamless mechanical tubing, gears, grades of steel, jumbo bloom vertical caster, TimkenSteel ultrapremium technology, and TimkenSteel endurance steels. Its services include thermal treatment, value added components, technical support and testing, supply chain, and TimkenSteel portal. The company was founded on October 24, 2013 and is headquartered in Canton, OH.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Williams |
| Employees | 1,865 |
| Founded | 2013 |
| Website | metallus.com |
